Unease over Latvia's euro entry

Tuesday, December 31, 2013 - 01:54

Dec 31 - On January 1 Latvia will become the 18th member of the euro zone and the 2nd ex-Soviet state to adopt the euro. But as Sonia Legg reports there's growing unease about the move in the tiny country.

▲ Hide Transcript

▶ View Transcript

Not many European countries have edible money with a longer shelf life than the real thing.
But the next batch of cookies on sale in the Latvian capital Riga will be euro ones - not the lat.
That's divided opinion among many of Latvia's two million residents.
(SOUNDBITE) (Russian) RESIDENT OF RIGA, OLEG BACHURIN SAYING:
"In all the other countries who've switched, prices have risen. They'll most likely rise here too and that's bad."
(SOUNDBITE) (Latvian) RESIDENT OF RIGA, KRISTINE SILAJEVA SAYING:
"It is sad that lat won't be a currency anymore, but about all that euro stuff, how it will be, I'm totally not worried."
In November surveys showed 53% of Latvians were in favour of the euro.
That's now fallen to less than one in four says Arnis Kaktins, from the Marketing and Public Opinion Research Centre.
(SOUNDBITE) (Latvian) SOCIOLOGIST, ARNIS KAKTINS SAYING:
"Surveys have continually shown that we've had a very deep crisis of trust in Latvia with an absolute majority over several years saying they don't trust either our parliament or our government. That means the powerful elite isn't able to sell any serious reform to the public. And it's the same story with the euro."
Five years ago Latvia had to take an international rescue package after its second largest bank collapsed.
Its economy was in a mess and inflation was near 16%.
Years of austerity have paid dividends.
Inflation is now around 1.3% and in 2012 Latvia showed some of the fastest growth rates in the EU.
Sanita Bajare is head of the euro steering committee.
(SOUNDBITE) (Latvian) HEAD OF STEERING COMMITTEE, SANITA BAJARE SAYING:
"Latvia is ready. Everyone has done their best so we can be confident the country is really prepared for the introduction of euro."
But it could take more than ensuring McDonalds has enough of the right cash.
The ex-Soviet state is the poorest member of the euro club.
And it'll now have to compete with 17 others for investments to fuel that far too illusive growth.

Reuters is the news and media division of Thomson Reuters. Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Learn more about Thomson Reuters products: